Mobile wallets, digital wallets — the terms are interchangeable, right? If you Google either phrase, you will find many websites and articles that use them as if they are synonymous. But after researching various definitions of these e-wallets, it seems there are a few notable differences.
A mobile wallet allows a person to use his or her smartphone to make purchases at stores by storing payment information on the phone. It accesses payment credentials via an encrypted chip in the smartphone with keys that can only be opened by using a password.
A digital wallet originally allowed a person to store payment information on his or her computer or in the cloud to make purchases, i.e., PayPal. But the definition of digital wallet appears to be evolving. Today, a digital wallet may also include things such as loyalty rewards, coupons — even passwords for websites. The digital wallet stores the payment information in the cloud on a secure remote server. Using cellular or Wi-Fi service, cloud-based mobile solutions send authorizations to the device to initiate and authorize the payment.
Possibly the most important difference that may affect bankers is that most mobile wallets still need a bank account for payment whereas not all digital wallets require them. (Again, PayPal.)
Currently, consumer use and even awareness of digital and mobile wallets are relatively low. But it is not too difficult to envision one day paying for purchases at Target with a smartphone. It is considerably more difficult to imagine putting paychecks in the cloud instead of in a bank. Besides, if the world moved to e-wallets, what would George Costanza do with all his receipts?
To learn more about mobile wallets and digital wallets, click on the link below.
Kari English is senior editor of BankNews.
Copyright © July 2013 BankNews Media